REMARKS BY

COMMERCE SECRETARY DON EVANS

THIRD ANNUAL FORUM ON FIGHTING CORRUPTION AND SAFEGUARDING INTEGRITY

May 31, 2003

Seoul, Korea

[Text As Prepared for Delivery.]

Mr. President, Minister Kang, Honorable Members of the Korean Cabinet and Diplomatic Corps, Distinguished Guests, Ladies and Gentlemen. We come together during defining days in the worldwide challenge to extend freedom, democracy, and prosperity to the millions of people who live in fear, are without hope, and are denied a voice in the decisions that shape their destinies.

Your presence in Seoul sends a powerful message to the world: a growing coalition of nations recognizes that corruption threatens liberty, freedom, international security, and the economic development that is our best hope to transform struggling societies and lift people from the grip of poverty.

By pledging our cooperation against this menace, we lift the flame of freedom and push back the darkness of despair. We are an alliance for hope. We are agents of compassion. And our commitment can transform the lives of people around the world whose potential dreams and aspirations are hijacked by corruption.

Attorney General Ashcroft was honored to speak before the Global Forum II, successfully hosted by the Netherlands. And now I am honored to commend the Republic of Korea’s admirable leadership on anti-corruption initiatives.

We appreciate the dedication of Mr. Sang-ok Park, Director General for the GFIII Organizing Office and the GFIII Organizing Committee for their hard work.

And we thank the people of Seoul for simultaneously hosting the Forum and the International Anticorruption Conference. This was an enormous undertaking and it has been carried out with great skill and total professionalism. The benefits of good governance are clear to all of us. Here in Seoul, the shift towards market forces and business regulatory reform have made Korea an engine of economic progress.

President Roh’s support for further market-friendly corporate reforms can expand trade and the climate of opportunity even more. South Korea’s economy is growing and the high standard of living enjoyed by the good people of Korea lights the path to prosperity for other countries in the region.

Anti-Corruption Cooperation Post-9/11

Since we last met in The Hague, the world has changed dramatically. We all face national security challenges that are as complicated, demanding, and dangerous as any we have ever confronted. Terrorist attacks have collectively killed thousands of innocent people in many different countries. And the grim prospect of terror groups acquiring and using weapons of mass destruction is a sobering danger. Corruption threatens security in ways that are not as readily apparent as a terrorist attack.

But, by nurturing an environment that feeds moral decay and terror, corruption threatens our common interests. Corrupt practices undermine the rule of law, weaken respect for public officials, and cast shadows of lawlessness in which terrorism can flourish. Governments that fail to meet the basic needs of their people create a dangerous momentum toward hopelessness and despair; feelings that terrorists twist to further their evil aspirations.

When governments steal from their people and institutions fail to protect them, citizens lose faith in democracy and civil society cannot survive. Countries plagued by chronic corruption endanger not only their neighbors but, as potential sanctuaries to terrorist groups, they threaten the world. Because of this, our task to attack corruption has taken on greater urgency since the Second Global Forum.

We must spread freedom, democratic principles, nurture free markets, protect individual property rights, expand trade, and encourage respect for human rights and the rule of law.

America’s Commitment to Fighting Corruption

Increasing accountability and transparency in governance around the world is a primary foreign policy objective of the United States. It is the necessary foundation of economic progress and successful development. History teaches us this: No nation can consider itself immune from the practical, moral, and ethical consequences of corruption. No country is immune from corruption and no country is alone in fighting corruption. We view the exposure of corruption in the United States as an opportunity to develop new initiatives to restore public confidence in government and repair damaged reputations within the private sector.

In the 1970’s after popular outrage following evidence of unethical and immoral practices on the part of American businesses, the United States began our offensive against international corruption. It came as a reaction to the questionable international business activities uncovered by the U. S. Securities and Exchange Commission following the Watergate hearings. We were shocked to discover that a large number of American firms were breaching moral and ethical boundaries to secure business abroad.

The United States recognized that the bribery of foreign public officials has many destructive effects. It harms those competing honestly. It tarnishes the reputations of the bribe-paying enterprises. It undermines good governance. It damages economic development. It weakens free trade. And it stains the character of America. The American people demanded action.

We responded by passing the Foreign Corrupt Practices Act in 1977. This act, with its strong criminal penalties, influenced U.S. businesses to develop corporate compliance codes and establish ethical guidelines to fight bribery and corruption. To enlist other countries in the movement toward good governance, we strongly supported the OECD Antibribery Convention, which entered into force in 1999.

Companies must not export bribery and corruption into the markets where they do business, any more than they would engage in such behavior at home. We are trying to eradicate bribery of foreign public officials by creating a global environment in which every company will recognize that it is within its economic interest to simply refuse to pay bribes.

Previously, corruption was so accepted in some countries that bribery of foreign public officials was actually considered a legitimate, tax-deductible business expense. Fortunately, we have made great strides in recent years. But there is still much to be done. We estimate that between May 1994 and April 2002, 474 contracts worth $237 billion may have been affected by bribery of foreign public officials.

Almost all of the OECD Convention’s signatories have now adopted tough measures to achieve the treaty’s purpose: building a network of nations with strong bribery safeguards in place. We look forward to those same countries taking steps to rigorously enforce those measures.

Every country must have the legal authority to wage the battle properly. That means putting strong national anticorruption laws on the books and enforcing them. Countries that are not signatories to the OECD Convention will soon have similar obligations to adopt and enforce anti-bribery laws under the United Nations Convention against Corruption currently under negotiation.

Efforts against bribery help promote broader international cooperation. This includes the current U.N. negotiations that go far beyond fighting bribery to address other fundamental issues in combating corruption, such as building critical preventative systems to stop corruption before it can occur. We should applaud international efforts creating broad anti-corruption initiatives such as those in the Organization of American States, the Council of Europe, APEC, and the Southern African Development Community (SADC). But, to give life to these commitments, they must be backed with concrete actions.

Role of Corporations in Fighting Corruption

Ensuring integrity and ethical practices is a shared responsibility among businesses, governments and in partnerships with our citizens.

Recently, after a pattern of corporate misconduct came to light in the U.S., President Bush called for tough new penalties against these breaches of trust. Over the past 15 months, U.S. authorities have moved aggressively to address issues of corporate behavior. Initiatives have focused on enhancing governance, disclosure and professional responsibility, and include the President’s Ten-Point Plan to improve corporate responsibility, and enactment of the Sarbanes-Oxley Act of 2002.

Private companies must also do their part. They should all develop voluntary corporate codes of conduct to ensure that their employees abide by anticorruption laws. Corporate governance is one aspect of corporate stewardship. Responsible corporate stewards are moral business leaders who foster freedom and strengthen democratic capitalism by working for the growth and success of both their companies and the communities in which they do business.

Corporations, working in free markets, can spread the essential values of honest competition and the rule of law. Businesses are at the strategic center of any civil society and business leaders have a moral responsibility to reject corrupt practices. If they do not honor their moral responsibilities, few, if any, will.

American Initiatives to Fight Corruption

The United States has been one of the leading actors in the effort to develop international instruments against corruption.

We were active in the OECD and OAS negotiations mentioned above and we look forward to completing an effective U.N. Anticorruption Convention. Among other benefits, we view it as a potentially important tool to build international cooperation to return stolen assets to their rightful owners.

We also believe that countries must take steps to fight corruption on the national level. Within the United States, our system offers numerous checks and balances to prevent, detect, and prosecute corrupt officials.

We have a variety of federal laws and regulations to prevent corruption. A vigorous press scrutinizes public activity. Our budgets are open to the public. Public contracts are bid openly. The federal government and most state governments have offices designed solely to detect corruption.

As President Bush has said: “All people deserve governments instituted by their own consent; legal systems that spread opportunity, instead of protecting the narrow interests of a few; and economic systems that respect their ambition and reward efforts of the people.”

Following the September 11^th attacks, the United States also modified our laws with measures that enhanced our ability to help fight corruption worldwide. The USA Patriot Act established foreign corruption as a money-laundering predicate. It also imposed stricter “know your customer” rules and placed additional responsibility on financial institutions to prevent corrupt foreign officials from hiding illicit assets in the United States.

It is critical that other countries take these same steps. We need the ability to share information so that we can follow the money trail across borders. We should require our financial institutions to establish the procedures and controls to conduct enhanced due diligence on accounts of “politically exposed persons.” In that way, we will detect and report transactions by corrupt foreign officials.

We believe that officials who betray their countries’ trust by engaging in corrupt practices should not find safe haven elsewhere in the world.

To demonstrate leadership in the battle against corruption, the United States is taking a number of steps. And critical countries must join with us in tightening their laws. Those who steal and defraud their own countries will not be welcome in the U.S. We will, and we have, denied entry to corrupt officials as appropriate under existing law. If they bring their money to the United States, we will seize it.

We will assist countries in recovering stolen funds that rightfully belong to them.

We are sending a clear message: you and your money cannot hide. You will be found. And you will be sent home. We hope that every country will join us to create an international “no safe haven” policy that denies corrupt officials the ability to travel freely, launder money and act with impunity.

Corruption & Development

Bribery and corruption are corrosive to economic progress and development. Like forms of invisible, illicit taxation, they sap economic growth and undermine development efforts.

In a particularly cruel irony, those who can least afford to absorb the damages pay the heaviest burden.

Corruption’s economic devastation is clear. According to the World Bank, corruption reduces a country’s growth rate by one half to a full percentage point every year.

Transparency is a key component of good governance. Without transparent systems, we cannot know whether resources are being applied to their intended purposes.

For example, once Uganda started to publish the funds allocated to local school districts, the amount actually received by the local schools jumped from 28% to 90%.

The United States urged the World Bank to hinge its approval of the Chad Cameroon pipeline project on a revenue management plan to ensure transparency and accountability. The U.S. Treasury Department and the World Bank are helping the Chadians develop a stable, open system to track and allocate their oil revenue.

And there is another important reason to foster greater transparency and accountability in developing nations. Investors are not willing to put capital at risk in dangerous and unstable parts of the world. Real efforts to implement good governance should encourage the flow of private capital to development efforts.

American Efforts to Expand Peace and Prosperity

As President Bush has said: “We fight against poverty because it is an answer to terror. We fight against poverty because opportunity is a fundamental right to human dignity. We fight against poverty because faith requires it and conscience demands it. And we fight against poverty with a growing conviction that major progress is within our reach.”

Without governments that are accountable, responsive, and transparent, U.S. development assistance can only succeed at the margins. To encourage the conditions needed for success by marrying greater contributions to greater responsibility, President Bush created the Millennium Challenge Account, which will pledge $5 billion in additional funds over the next three years.

In addition to this initiative, the United States continues to work with other committed countries to help them examine their overall anti-corruption efforts, and coordinate and target assistance to more effectively advance our shared goals. This initiative will help developing nations improve their economies and raise their standards of living.

Because economic development assistance will not succeed without sound policies in the developing country, U.S. support will be directed to governments demonstrating accountability to their citizens. President Bush explained that the new assistance would only be provided to countries that rule justly, invest in their people and reduce corruption. Public financial management must also be transparent to ensure that accountability extends to all of the sectors working on economic development. The failure of governments to audit and publish revenues and expenditures can shield corrupt officials who enrich themselves.

This year President Bush has made increased U.S. contributions to the World Bank contingent on increased transparency and accountability in the Bank’s lending programs and related diagnostics.

Corruption and Free Trade

Free trade and global democratic capitalism unleash the freedom to innovate, to exchange goods and services, and to interact without interference from governments.

In many of our Free Trade Agreements, the U.S. includes procurement chapters that contain strong transparency requirements. In fact, our Congress has made transparency and anticorruption measures key negotiating objectives for our trade agreements. The U.S. is a strong voice in the effort to negotiate a WTO Agreement on Transparency in Government Procurement. We will continue advocating for this agreement at the upcoming WTO Ministerial in Cancun.

President Bush has also joined with other APEC leaders to commit to the APEC Transparency Standards Statement. Transparency is key to ensuring that decisions on procurement and awarding of concessions are made on the merits, for the public’s benefit, and not for personal gain.

Accountability, transparency, and open markets spread the blessings of freedom and empower people to support democratic institutions in their countries.

Conclusion

Two years ago at Global Forum II, Attorney General Ashcroft rightly stated that one of the most critical aspects required to defeat corruption was to acknowledge its moral component. “We must come to the recognition, personally and culturally, that corruption is not just a violation of law, not just an economic disadvantage, and not merely a political problem, but that it is morally wrong.”

Clearly, the many nations participating in this Forum are a powerful testament to the turning tide against corruption. All of us recognize that this dangerous and destructive vice can no longer be tolerated or ignored.

The United States welcomes this renewed opportunity to continue standing with your countries to encourage good governance, promote transparency, and to deny safe haven to all those who corruptly betray their countries.

The fight against corruption also requires commitment by leaders in the private sector, NGOs, and civil society. The struggle will take time. It will not be easy to eradicate corruption, but it is a road we must travel. We must heed the moral responsibility to assist the millions trapped in global poverty.

There is the power in this room to make a difference – to rally around the common goal and common good of a better life for all mankind, a life of freedom, opportunity, hope and prosperity. So, let’s go. It’s our job. It’s our responsibility. Thank you and God bless you.

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